2/6/2024 - Economy and Finance

CFA Certification: Challenge, Data and Recommendations

By Segundo Smith Estrada

CFA Certification: Challenge, Data and Recommendations

El Salvador Chartered Financial Analyst (CFA) is a prestigious professional certification awarded by CFA Institute, after completing a series of 3 exams and complying with a minimum of 4 years of relevant professional development. It is intended for ambitious professionals seeking to stand out in the field of finance and be recognized worldwide; since it has become a standard of excellence in the financial industry.

The process for obtaining CFA certification is known for its requirement and depth in the various topics it includes. The temario comprises 10 topics, with variations in weighting according to the level being ridiculed. The contents are as follows: Quantitative methods, Economics, Financial Reporting, Corporate Issuers, Equity Investments, Fixed Income, Derivatives, Alternative Investments, Portfolio Management and Ethics.

Preparation for the examination requires substantial commitment of time, effort and discipline. It is estimated that the average of candidates dedicates at least 300 hours of study to each level. The constant study is key and time is divided in percentage of theoretical study, percentage of practical exercise and, lastly, percentage of exercise of models of examination and correction of these. The first two components usually take longer, but all are vital to get the expected result. In addition, the complexity of the themes and the amount of material make preparation a great challenge.

A relevant fact is that, according to the statistics of CFA Institute, the process of obtaining the title may take several years. Applicants often take an average of four years to complete the three exam levels, and the approval rate varies for each level, being usually low, underlining the difficulty of the process. El Salvador passing rate average in the last 10 years was 40% for level I, 42% for level II and 52% for level III. On the other hand, it is estimated that at least 70% of the correct answers are required to obtain approval in each of the tests.

CFA certification is recognized for its impact on the professional career of those who obtain it, serving as a badge that demonstrates deep knowledge and dedication to ethical standards in finance. Financial consultants, portfolio managers, risk analysts, among others, are the main roles of those who pursue this certification. Many use the title to open doors to international career opportunities, as it is respected worldwide.

Having briefly introduced the CFA certification, I now want to share some recommendations and good practices that I have been highlighting during my preparation process for level I; which I have successfully leased in November 2023.

First of all, it is necessary to have a strategic planning of the times. This makes reference to being able to set up a plan for exam preparation and carry it out strictly as possible. Ideally, the plan is greater than 5/6 months because they usually have days or weeks that it costs to comply with the pact. The same should include daily, weekly and monthly goals; ensuring to cover all themes and leaving a final month to reinforce concepts and conduct model examinations. It is estimated 300 hours for the preparation of each level, but this depends largely on each candidate; in my case, my preparation has rolled over 400 hours.

Secondly, to me it was very useful the study material Kaplan Schweser, the same is acquired regardless of the exam. There are several study materials available, but I firmly believe that Kaplan is of the best due to quality and format; it has theoretical videos explaining in detail each of the themes, more than 4000 questions to practice, 4 mocks; and above all a highly recommended and practical trackeo mechanism. Either way, for all those who do not want to pay an additional course, have the option to practice and use the study material granted by the same CFA Institute.

Thirdly, it must be noted that stress and frustration are part of the process; the key is not to despair. The CFA has a wide variety of themes and depending on the profile of each will be simpler and more difficult. The process is long and it usually happens that one forgets some topics that saw weeks ago; not being dropped since everything ends up consolidating in the final weeks. In addition, it often happens that the notes of the first model exams are usually much below the minimum approval note and this is very usual due to the mentioned above. In my case, in my first mock you get 55%, when the minimum approval note is usually 70%. At the same time, it is important to note that it is extremely relevant to know what the strengths and weaknesses of each one are in relation to the different themes in order to be able to effectively address those who generate greater difficulty.

Fourth, note that the CFA Institute gives much importance to the section Ethics and Financial Reporting, mainly at level I. By ende, it is essential to have both sections well prepared, because it is the myth that it is exclusionary to approve the two sections in order to be able to approve the entire examination. Anyway, the sum of both themes has a very relevant weighting, about 40%. This is a good point to focus, and thus specifically strengthen these topics, given the transcendence that the institute gives you.

Lastly and not least, Joint preparation With friends, colleagues or colleagues it is of enormous help. Given that a collective environment is generated where it feels accompanied, motivated and observes the individual process of the other person and understands that we all end up crossing through it. In my case, I prepared level I with two great friends and the biggest advantage I watched over the last month, because we did meets Virtual almost daily to clear doubts and finish consolidating knowledge. In any case, there are several online groups/units that allow you to establish connections with professionals who have already obtained certification and share specific experiences, knowledge and advice. Having the opportunity to talk to people who have previously crossed the preparation of any of the tests is of great use.

As a final message I want to stress that the CFA level I is a difficult examination, but for nothing impossible; with discipline, effort and constancy success is assured.

Evidence to all the brave!

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Segundo Smith Estrada

Segundo Smith Estrada

Bachelor of Business Economy, Financial Advisor.

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